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Free AccessMNI POLICY: BOJ Loan Survey Result At Odds To Fed, ECB Surveys
By Hiroshi Inoue
TOKYO (MNI) - Bank of Japan officials are encouraged by favourable results
from its own loan survey, particularly in comparison with less favourable loan
surveys by both the U.S. Federal Reserve and the European Central Bank, MNI
understands.
The latest BOJ survey showed that commercial banks have eased credit
standards for loans to firms, which implies they eased considerably or eased
somewhat.
The diffusion index for credit standards by banks to large firms over the
next three months stood at +10, up from +2 in January. The DI to smaller firms
stood at +26 in April, up from +3 in January.
BOJ analysis showed that the existence of governmental financial entities
supporting corporate financing is behind Japanese banks' active stance on loans.
Despite concern over credit risks, those banks appeared to accept
responsibility emerging from public opinion to facilitate corporate financing.
Meanwhile, the similar surveys by the Fed and the ECB showed that
commercial banks tightened their credit standards for loans to firms.
Commercial banks in the U.S. and Europe are more sensitive to credit risks
and non-performing loans, which will impair their businesses and continuance.
The Fed's senior loan office opinion survey on bank lending practices
released May 4 said, "Regarding loans to businesses, respondents to the April
survey indicated that, on balance, they tightened their standards and terms
significantly on commercial and industrial (C&I) loans to firms of all sizes."
It also said, "Banks reported stronger demand for C&I loans from large and
middle-market firms, while demand for C&I loans from small firms was about
unchanged."
Net percent of domestic respondents tightening standards for commercial and
industrial loans rose to near 40 from zero.
The ECB's bank lending survey released April 28 said, "The net percentage
of banks reporting a tightening of credit standards for loans or credit lines to
firms was small compared with the financial and sovereign debt crises." But
credit standards for loans to enterprises tightened in the first quarter of 2020
(a net percentage at 4%, after 1% in the fourth quarter of 2019).
The ECB's survey said, "Banks indicated that they were not yet able to
fully evaluate the effects of the coronavirus pandemic." "Banks referred mainly
to the deterioration of the general economic outlook and firms' increased credit
risk as relevant factors for the tightening of their credit standards."
Net percentages of perception of risk rose to +19 in the first quarter of
2020 from +6 in the fourth quarter of 2019.
The weighted difference ("diffusion index") between the percentage of banks
reporting that credit standards have been tightened and the percentage of banks
reporting that they have been eased."
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMJBJ$,M$A$$$,M$J$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.